Conforming Loan Limits Are Set To Rise!

I’m writing this blog from Washington D.C. where for the past week, I’ve been lobbying with the National Association of Mortgage Brokers (NAMB), and the California Association of Mortgage Brokers (CAMB) to raise the Conforming Loan Limits on Residential Mortgage Loans. This increase is one part of the overall Economic Stimulus Package that has been bouncing around the House and Senate for the last month.

Well….last night, the Senate overwhelmingly approved the Economic Stimulus Package (including the loan limit increase.) Within hours, the House passed it as well! We’re now just waiting for Bush to put his John Hancock on the proposal, and the housing turbulence we’ve seen over the last year, can finally begin to stabilize.

Raising the conforming loan limit from $417K to as high as nearly $730K based on area median home prices will present incredible opportunities for home buyers and homeowners. Home buyers in high cost areas will now be able to qualify for a conforming loan on a more expensive home. Until now, home buyers who wished to purchase a home for more than $417K in these areas were forced to obtain a "jumbo loan." Jumbo loans come with higher interest rates. But, that’s soon to be a thing of the past.

Furthermore, homeowners who have equity in their homes and good credit (aka FICO scores), will also be able to refinance their current mortgage into a fixed rate mortgage, backed by the Government Sponsored Entities of Freddie Mac and Fannie Mae. This will be particularly beneficial to homeowners who currently have an Adjustable Rate Mortgage (ARM.)

For sellers, this increase should have a positive effect as well, as buyers who shied away from the market in the last year, return to the purchase market to take advantage of the temporary increase.

Couple all of this with the fact that this week, interest rates on 30 year fixed mortgage loans hovered right around 5.6% (near historic lows), and we’ve got a recipe for incredible opportunity. If you’re looking to buy or refinance once this increase goes into effect (July 1, 2008), start organizing your paperwork now. You have a great deal to gain, by acting fast.

By the way, you don’t have to wait until July 1 to take advantage of the current low rates. It may well be that you don’t need to or shouldn’t wait due to the circumstances of the loan you’re looking for. For example, you may have the perfect property at a great price today. Or you might not need a loan in the range of $417,000-$729,750, or the location you’re buying in might not qualify for the higher loan limits, or you might want a different type of loan. Or...the list goes on. You get the idea!

Contact us today at 415-406-2330 if you have any questions. Or to get the paperwork for your loan started, click here for a loan application checklist: http://www.smithcraine.com/LoanAppChecklist